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Disappointing Collection of Fines by Companies House Raises Concerns

The UK government agency tasked with maintaining the national company register has garnered only £1,250 in penalties since being granted new powers to combat corruption. This revelation has sparked concerns about the efficacy of Companies House and its ability to enforce compliance.

In light of alarming incidents where fraudsters have registered businesses using fictitious names like “Darth Vader” and “Santa Claus,” Companies House is pursuing a series of reforms. Key among these is the introduction of identity verification checks for company directors. This comes after the agency acknowledged that as much as 20% of the 4.9 million entries in its register may contain inaccurate or fraudulent information.

Since last autumn, the agency has held the authority to impose financial penalties on companies that fail to adhere to regulations, including timely submission of ownership details. In response to parliamentary inquiries from Liam Byrne, chair of the business select committee, it was revealed that 234 penalties totaling £58,500 have been issued since October of the previous year. However, only £1,250 of that amount has actually been collected, reflecting just 2% of the total fines imposed.

Justin Madders, a junior minister at the Department for Business and Trade, has stated that efforts to collect these penalties will gain momentum in the summer of 2025. Outstanding fines will be escalated to debt collection and litigation when necessary.

Byrne expressed his dismay at the minimal penalty collection, linking it to broader issues his committee has highlighted regarding the reforms at Companies House. He pointed out a concerning 20% vacancy rate in digital roles within the agency, which suggests that its digital transformation initiatives are not adequately funded.

“With up to a million companies based on falsehoods, Companies House must adopt a stricter approach,” Byrne emphasized. “This isn’t merely a registration system; it serves as a crucial element in combating economic crime.”

Byrne further argued that relying on warnings and good intentions will not suffice to eradicate fraud. “We require robust enforcement actions to tackle those attempting to undermine our economy, evade sanctions, or launder money,” he stated.

A spokesperson for Companies House defended the agency’s approach to penalties, asserting that financial sanctions represent only one component of its enforcement strategy. “Penalties are being rolled out systematically to enhance compliance, and we anticipate that the volume of penalties will increase as we address non-compliance,” the spokesperson remarked. They also confirmed that the agency has established thorough processes for pursuing outstanding payments, including legal action when needed.

In a letter to Companies House last month, Byrne raised multiple issues, including allegations that companies listed on the register have been exploited for sanctions evasion and money laundering with the “alleged assistance of UK residents.” This has heightened scrutiny on the agency’s capacity to manage and oversee the integrity of the corporate register effectively.

Source
www.theguardian.com